Economics · Oct / Nov 2020 · Paper 21 · Question 3
0455
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Among the reasons for Malaysia’s continued economic growth are rises in consumer spending and the country’s ability to adapt to changes in global demand. For example, when the price of natural rubber fell, most rubber plantations changed to palm oil production. The government has tried to promote the growth of different sectors, including the primary sector.
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3(a)[2]
State two sectors, other than the primary sector, in an economy. Secondary sector (1)
Tertiary sector (1)
2 Reward but do not expect the quaternary sector.
3(b)[4]
Explain two possible reasons for a fall in the price of a product such as natural rubber. Logical explanation which might include: Decrease in demand for natural rubber (1)
emergence of substitutes (1)
decrease in future expected price or any other relevant examples (1). Increase in supply of natural rubber (1)
due to increase in number of producers / good yield / relevant example (1).
3(c)[6]
Analyse the influences on spending. Coherent analysis which might include: Income (1)
higher income increases the ability to spend / increases purchasing power (1). The rate of interest (1)
a change in the rate of interest influences the proportion of income that is spent and saved (1)
and affects borrowing (1). Confidence (1)
people spend more when they are optimistic (1)
about future income / job security (1). Wealth (1)
people can spend some of their wealth (1)
e.g. sell shares (1)
use it as collateral to borrow (1). Inflation (1)
spending may fall if prices rise more than money wages (1)
spending may rise as people seek to buy products before they increase in price even further (1). Expansionary fiscal / monetary policy may increase spending (1).
3(d)[8]
Discuss whether or not the growth of the primary sector is beneficial to a country. In assessing each answer, use the table opposite. Why it is beneficial:
can increase total output of the economy, increasing economic growthcan provide employment opportunities that are accessible to all / requires low skill / requires low technologycould increase standards of living in rural areasprovide raw materials for secondary sectorcould ensure that country has food security, reduce imports of necessities, if prices of primary sector products are high e.g. high oil price which this could bring huge export revenue to the country. This could reduce current account deficit. Why it is not beneficial:productivity may be low in the primary sector, very low value addedmay be low wages and poor working conditionsoverdependence on primary sector may restrict growth of secondary and tertiary sectorssome primary industries may be disrupted by weather conditions and natural disasterssupply and demand are inelastic so there may be considerable price fluctuationsnatural resources e.g. copper may be depleted. Level Descriptors Mark A reasoned discussion which accurately examines both sides of the economic argument, making use of economic information and clear and logical analysis to evaluate economic issues and situations. One side of the argument may have more depth than the other, but overall both sides of the argument are considered and developed. There is thoughtful evaluation of economic concepts, terminology, information and/or data appropriate to the question. The discussion may also point out the possible uncertainties of alternative decisions and outcomes. 6–8 A reasoned discussion which makes use of economic information and clear analysis to evaluate economic issues and situations. The answer may lack some depth and development or may be one-sided. There is relevant use of economic concepts, terminology, information and data appropriate to the question. 3–5 There is a simple attempt at using economic definitions and terminology. Some reference may be made to economic theory, with occasional understanding. 1–2 A mark of zero should be awarded for no creditable content. Guidance Example of an L1 answer: Growth of the primary sector may benefit an economy because it uses renewable and non-renewable resources. It provides the raw materials needed by other sectors. Consumers’ demands cannot be fulfilled without the primary sector as it is needed to produce all goods and services. It may not be as beneficial as other sectors as wages are lower and natural resources may eventually become depleted. Principal Examiner comment: A few relevant identifications.
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